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Lehman Brothers Investment Management
Confidential0022907FOIA CONFIDENTIAL TREATMENT REQUESTED BY
LEHMAN BROTHERS HOLDINGS INC.LBEX-DOCID 317782
Investment Management (IMD) Background
� Lehman Brothers has built an investment management business grounded in a:– Leading asset management franchise expanded with the acquisitions of Neuberger Berman (“NB”), the
Crossroads Group and Lincoln Capital Fixed Income (each acquired in 2003)– Strong Private Equity (“PE”) business that dates back to 1984 and is growing rapidly– Highly productive high-net-worth brokerage/wealth advisory business (“Private Investment
Management” or “PIM”)
� The target business model has been a fully scaled, high margin business that delivers best-in-class products and services to institutional, intermediary and individual clients around the world
� The business currently reflects a mix of:
1. Profitable ‘developed’ businesses that are highly competitive in their respective segments
2. Segments that are ‘developing’ toward a larger scale that will expand margins and drive profit growth
3. ‘Start-up’ seeded initiatives with high growth potential
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IMD OverviewInvestment Management Division
– ~ 3,480 employees– 40 locations worldwide– AUM of $279Bn(1)
___________________________1. All AUM as of June 30, 2008. 3. Source: Company filings, Barron’s and LEH strategy estimates.
IMD Corporate ~ 50 employeesIMD Infrastructure ~ 900 employees
Asset Management~ 1,170 employees
Alternatives - Private Equity~ 450 employees
Private Investment Management(2)
~ 910 employees
� $114Bn in Equities AUM
� 30+ investment teams, 109 portfolio managers and 95 research analysts
� $128Bn in Fixed Income AUM
– $41Bn in Liquidity
– $40Bn in core Fixed Income
– $46Bn in Leveraged Markets/Other(4)
� ~130 investment professionals
Alternatives (ex. Private Equity)� $12Bn in AUM
– $5Bn in Fund of Hedge Funds
– $7Bn in Single Manager Strategies
– 6 Minority Stakes (AUM not counted)
� $23Bn in AUM; $8Bn 2008P fundraising
� Seven asset classes
Merchant Banking
Venture Capital
Real Estate
Private Fund Investments
Mezzanine Funds
HF Minority Stakes
Infrastructure
� 366 highly productive Investment Representatives (IRs) focused on HNW wealth management
$1.2
$1.3
$1.4
$1.6
$2.0
$3.3
Bear Stearns
JP Morgan PCS
CSFB
DB Alex Brown
Lehman Brothers
Goldman Sachs
2007 IR Productivity ($M Rev/IR)(3)
Confidential
– Distribution of Asset Management and Private Equity products
– Equities and Fixed Income execution
– Manager Access Program
Note: Presentation excludes 196 person middle market institutional sales force
___________________________2. PIM manages $2Bn of assets through brokerage and investment advisory accounts, and
Manager Access Program.4. Includes Global Fixed Income AUM.
Developed
Start-up
Overview
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2003 Acquisitions
IMD Assets Under Management
11/30/03 - 6/30/08 AUM ($Bn)
2003 2004 2005 2006 2007 6/30/08
22% CAGR
Confidential
IMD’s $279Bn AUM is diversified across asset classes a nd distribution channels
AUM by Client (%) as of 6/30/08AUM by Asset Class (%) as of 6/30/08
(1)
___________________________1. 2003 Acquisitions: Neuberger Berman ($68Bn), Lincoln Capital ($33Bn) and Crossroads ($2Bn).
$111$124
$163
$209
$268 $279
$103
Overview
Private Equity8%
Liquidity16%
Equity37%
Fixed Income35%
Alts (ex. PE)4%
High Net Worth26%
Intermediary19%
Institutional55%
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$0.9
$1.4$1.1
$0.8$0.6
$0.0
$0.1
$0.3
$0.2
$0.2
$0.1
$0.0
$0.3
$0.6
$0.6
$0.4
$0.4
$0.5
2003 2004 2005 2006 2007 May 2008 YTD
IMD Revenue
IMD continues to experience high revenue growth from a strong and diversified recurring fee based business
2003 – May 2008 YTD Revenue ($Bn)
$1.3
$2.3Total: 27% CAGR
$1.8
$1.4
$1.1
Confidential
Asset Mgmt. &
PE: 34% CAGRPIM
Private Equity
Asset Management
$0.4
Overview
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Equities, $6.9
Alts (ex. PE),
$1.8
Private Equity, $5.2
Fixed Income,
$4.1
IMD Comprehensive Client Coverage
Our sales force and client service organization suppor ts our existing client base and has raised ~ $86Bn (1) since December 2006
� 39 sales people
� ~ 500 client relationships (including 36% of Fortune 100 companies)
Institutions� 36 sales people
� ~ 200 client relationships (including major wirehouses, insurance, 401K record keepers and fund supermarkets)
Intermediary� 56 Wealth Advisors
� ~ 650 client relationships with $5 mm+ in assets
NB Wealth Mgmt.
___________________________1. Excludes assets raised directly by investment teams.2. Gross inflows are over the period from 11/30/06 to 6/30/08 and include Manager Access Program, Hedge Advisor and third party fund asset raises.
Shared Support
Product Specialists
– Long-only: 21
– Alternatives (ex. PE): 7
– Private Equity: 18– 2
Client Service (client onboarding,
customized reporting and ongoing support):63
Marketing/RFP Team: 44
Gross Flows(2) ($Bn) Gross Flows(2) ($Bn) Gross Flows(2) ($Bn)
Total: $45.0Bn Total: $16.1Bn Total: $7.3Bn
Confidential
� 366 Investment Representatives� ~ 2,500 $10mm households with
$5 mm+ in assets at LEH� Provide clients full wealth
management suite of products and services
PIM HNW
Gross Flows(2) ($Bn)
Total: $18.0Bn
Equities, $3.5
Alts (ex. PE),
$3.3
Private Equity, $1.6
Fixed Income, $36.7
Fixed Income,
$3.2
Private Equity, $0.2
Alts (ex. PE),
$0.1
Equities, $12.7
Fixed Income,
$0.8
Private Equity, $0.2
Alts (ex. PE),
$0.1
Equities, $6.2
Overview
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IMD Global DistributionIMD has ~ 500 sales professionals located in key clie nt markets
New York, 174
Boston, 25
Dallas, 20
Houston, 12
Tokyo, 4
Singapore, 2Miami, 33
Tampa, 6
Confidential
InstitutionalHNWInstitutional and HNW
Perth, 1
Hong Kong, 1Doha, 1
Minneapolis, 1
Overview
70% 2%28%
Chicago, 41
Cincinnati, 1 Frankfurt, 1
Zurich, 1San Francisco, 29
Madrid, 2
Milan, 2
Washington, DC, 3
Atlanta, 20
Palm Beach, 18
London, 12
Amsterdam, 1
Paris, 1
Sydney, 2
Philadelphia, 17
Melbourne, 1
Los Angeles, 30
Newport Beach, 3
Denver, 1
Buenos Aires, 29
Dubai, 2
Gross Flows(1)
___________________________1. Gross inflows are over the period from 12/1/06 to 6/30/08 by client domicile.
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IMD Global ManufacturingOur manufacturing efforts are concentrated in New Yor k and Chicago with additional key locations to benefit from local presence and specific investment talent
New York, 475
Boston, 9Liquidity
Dallas, 128PE FoFs
Chicago, 82
London, 122
Paris, 10 Quant
Hong Kong, 36
Confidential
Hub
Regional HubSpecific Investment Teams/Local Knowledge
Amsterdam, 2Global REITs
Menlo Park, 13Venture Capital
Overview
Shanghai, 6China L/S
Tokyo, 7PE Real Estate
Mumbai, 8Asia Alternatives
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Strategic Partnership OpportunitiesIMD is particularly effective when it pulls together broad capabilities to meet specific client needs. Four recent pitches are illustrative:
� Goal: Transform itself into a world class investor in part by leveraging providers more effectively; move significant assets to external managers
� Solution: Hire Lehman Brothers (JPM, MS and BlackRock) to manage a $1Bn global balanced public markets portfolio across 10+ benchmarks
� Key Competitive Advantage: Few asset managers have the breadth of internal capabilities (from cash to emerging market equities / GTAA) –fewer still the teamwork necessary to implement the portfolio and deliver outstanding performance
� Ancillary Benefit: Preferred provider with opportunities to compete for significant additional alternatives mandates
Large U.S. Public Plan (mandate)
� Goal: Increase Alternatives (Private Equity, Hedge Funds and Real Estate) allocation from 1% to 25% in 2012, despite material internal staffing constraints. Allocation to Alternatives a direct result of need to reduce volatility in portfolio
� Solution: Hire Lehman Brothers to: educate staff; provide tactical asset allocation; and manage up to 50% of the Alts portfolio using external managers
� Key Competitive Advantage: While there are many PE/HF/RE fund-of-funds, the combination of holistic advice on implementation together with our investment capabilities was unique
� Ancillary Benefit: Seeds our RE Fund of Funds business; future potential for staff to choose our proprietary product for directinvestments; gives IMD tremendous credibility in marketplace
Large U.S. Corporate Plan (mandate) Large U.K. Corporate (mandate)� Goal: UK Pension, under-funded, frustrated with ineffective,
disconnected external investment advice
� Solution: Hire Lehman Brothers to provide holistic, coordinated management of both assets and liabilities using internal and external managers
� Key Competitive Advantage: Breadth of internal and external capabilities across asset classes – outstanding track records; coherent, whole portfolio (assets and liabilities) approach
� Ancillary Benefit: Amongst the first UK pension schemes to pursue a fully outsourced model. Gives us first mover advantage
Sovereign Wealth Fund (pitch)� Goal: SWF traditionally focused on direct equity investments wishes
to take advantage of current dislocation
� Solution: Hire Lehman Brothers to create a customized credit optimization strategy across multiple sectors of credit markets
� Key Competitive Advantage: Combination of quantitative expertise, asset allocation capabilities, expertise in credit and ability to implement is unique
� Ancillary Benefit: Substantial relationship developed with an important SWF with a $110Bn portfolio. Provides framework whichcan be adopted for other clients
Confidential
Overview
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IMD Business Overview: Contents
Confidential
Developed Businesses
Developing Businesses
Start-ups
Equities Asset Management
(Neuberger Berman) Pages: 11-14
Alternatives (PE and Hedge Funds)
Pages: 15-19
Private Investment Management
Page: 20
Fixed IncomeAsset Management
Pages: 21-22
Europe/Asia-Pacific Asset Management
Page: 23
Start-up Efforts Page: 24
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IMD Overview: Financial Highlights
� Equities: Marquee Neuberger Berman equities business with $114Bn in AUM and exceptional performance. Leading HNW separate account, mutual fund, institutional and intermediary equities manufacturing and distribution
� Alternatives: Diversified platform in private equity, fund of hedge funds, commodities and strategic partnerships
� PIM: Highly productive (#2 in industry rankings) IR channel focused on distributing Neuberger Berman and Alternatives
Developed Businesses
Developing Businesses
Start-up Initiatives� Private Equity: 3 new asset classes launched with target 2010 commitments of
$7Bn
� Hedge Funds/Quant: The US Quantitative Investment Group has leading returns across the product set and is poised for strong growth
� Fixed Income: Blend of highly profitable strategies (e.g., Liquidity and High Yield) with a core and index business approaching attractive scale. Investments to expand business scope, with more sophisticated higher fee products, are beginning to yield returns
� Europe/Asia-Pacific: Maturing infrastructure and new business development capabilities in place. Significant traction with clients is a “leading indicator” of future financial returns
Confidential
EBITDA Contribution (1) – Developed ($M)
EBITDA Contribution (1) – Developing ($M)
EBITDA Contribution (1) – Start-up ($M)
___________________________1. Excludes shared LEH allocations; see Appendix for detail.
($M) 2007 2008 2009 2010Shared LEH Allocations (135) (144) (151) (159)
EBITDA 431 700 1,018 1,418
$639
$911
$1,098
$1,419
2007 2008 2009 2010
($12)
($39)
$55
$94
2007 2008 2009 2010
($61)
($28)
$15
$64
2007 2008 2009 2010
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Developed Businesses
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606050413126
454744
35
2419
99
8
5
55
2003 2004 2005 2006 2007 6/30/08
Insti tutional
MFI & Intermediary
HNW
� One of the premier HNW client franchises in the U.S. (PAM)
– $60Bn AUM; 109 bps average fees
– Long-term client relationships
– Exceptional investment performance
� Successful and highly profitable Mutual Fund business
– $33Bn AUM ($5Bn sub-advised); 81 bps average fees
– Relationships with 23 of 25 top Defined Contribution recordkeepers
� Managed Account business serves wirehouses and other financial intermediaries and is growing rapidly
– $12Bn AUM; 53 bps average fees
– Ranked ninth-largest third-party program among separate account asset managers
� Momentum winning corporate/public pensions mandates
– $9Bn AUM; 54 bps average fees
___________________________1. As of June 30, 2008.2. Excludes shared LEH allocations; see Appendix for detail.
Manages $114Bn (1) in AUM with global client coverage of institutions, financial intermediaries and HNW individuals
Confidential
Assets Under Management ($Bn)Equities Money Manager Established in 1939
Developed Businesses
Equities Asset Management Financials ($M)
PIMAltEq
$50$61
$82
$102$116 $114
20% CAGR
Revenue 2007 2008 2009 2010
HNW $618 $681 $773 $876MFI & Intermediary 326 322 354 395Institutional 49 52 55 65
Total 993 1,055 1,183 1,336
EBITDA (2) $394 $407 $465 $542Margin (%) 40% 39% 39% 41%
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-13.1%
4.4%
7.6%
2.9%
-4.8%
9.1%
13.8%
7.1%
-15%
-10%
-5%
0%
5%
10%
15%
20%
1 Year 3 Year 5 Year 10 Year
Neuberger Berman: PAM Investment Performance
Neuberger Berman Private Asset Management
� The Neuberger “PAM” business consists of 25 teams that manage HNW separate accounts
� The teams are supported by dedicated buy-side research analysts
– Professionals are widely respected and host ~1,500 company management presentations each year
� Performance has been exceptional over nearly every time frame
� PAM portfolio managers consist of several well known investors: Marvin Schwartz, Richard Glasebrook, Jeff Bolton, Judy Vale, Bob D’Alelio and Gerry Kaminsky, to name a few
Confidential
Neuberger Berman investment teams have consistently de livered exceptional performance for their clients
S&P 500Neuberger
___________________________1. Performance as of 6/30/2008
Developed Businesses
PAM Performance(1)
PAM AUM Growth ($Bn)
PIMAltEq
$26$31
$41$50
$60 $60
2003 2004 2005 2006 2007 6/30/08
20% CAGR
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Neuberger Berman PAM Equities - Performance
___________________________1. Total fund composite, net of fees.2. For each group, composite with largest AUM is depicted.3. Only teams with combined AUM in excess of $500M are shown.
As of June 30, 100% of HNW equities AUM has outperfo rmed the benchmark YTD, over 94% on a 1-year basis, and over 97% on a 3-year basis
Confidential
Developed Businesses
PIMAltEq
Composite(1,2,3) Strategy Inception Date CompExcess Return Comp
Excess Return Comp
Excess Return Comp
Excess Return
Appel Group LCG Jan-90 (7.80) 1.30 2.40 8.40 9.90 4.00 12.30 5.00
Bolton Group All CC Jan-90 (8.13) 3.78 (7.94) 5.18 6.58 2.17 9.28 1.70
Bretter Group LCG Jan-90 (9.27) 2.64 (10.80) 2.32 2.09 (2.32) 4.50 (3.09)
Capital Group Core LCC Jan-97 (4.93) 6.98 (2.53) 10.59 8.58 4.18 10.48 2.89
Fraenkel / Stein / PearlmanFraenkel Group - Equity M-LCG Jun-92 (7.08) 4.84 (5.60) 7.52 5.91 1.50 7.28 (0.30)Pearlman Group - Equity M-LC Jan-04 (7.68) 4.23 (4.85) 8.27 7.01 2.60 -- --Joe Stein Group All CG Jun-02 (4.18) 7.73 (3.39) 9.73 7.94 3.54 10.34 2.75
Ganek / Nackenson Group Multi CC Jan-90 (7.79) 4.13 (3.85) 9.27 9.30 4.89 9.93 2.35
Kamen Group LCC Jan-91 (8.80) 3.11 (7.11) 6.01 5.07 0.67 6.78 (0.80)Kamen / Ganek / Nackenson Eq. Inc. Specialty Jan-05 (4.27) 7.65 (1.67) 11.45 4.87 0.46 -- --
Team Kaminsky All CC Jan-97 (2.66) 8.39 (0.98) 11.70 10.09 5.37 12.43 4.05
Kantor All CC Jun-05 (4.86) 7.06 (6.33) 6.79 12.17 7.76 -- --
KSE Group - Value All CV Jan-89 3.22 15.13 6.33 19.45 11.38 6.97 13.50 5.91
MLG Group M-LCC Jan-91 5.06 16.97 10.58 23.70 12.01 7.61 12.21 4.63
Paduano Group All CC Jan-91 (6.70) 5.21 (9.57) 3.55 7.30 2.89 9.85 2.26
Rachlin Group Income Plus Eq. Inc. Aug-96 (6.12) 5.79 (14.57) (1.45) 9.86 5.46 15.84 8.25
Straus Group M-LCV Jan-90 (3.18) 8.73 (5.17) 7.95 9.45 5.04 17.16 9.57
3-Year 5-YearYTD 1-Year
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Neuberger Berman: Mutual Fund and Institutional The equities mutual funds have leading Morningstar ra tings. The separate account business has generally outperformed respective benchmarks over 1, 3 and 5-year periods
Developed Businesses
Institutional Separate AccountsMutual Funds(1)
� 99% of AUM is in products that exceed the benchmark over 5 years
Mutual Fund Investment Performance(2) Institutional Separate Account Inv. Performance(2)
0%
20%
40%
60%
80%
100%
YTD 1 Year 3 Year 5 Year
% AUM Exceeding
Benchmark
% AUM Exceeding
Benchmark
0%
20%
40%
60%
80%
100%
YTD 1 Year 3 Year 5 Year
94% 90% 87% 97% 89% 84% 90% 99%
___________________________1. Morningstar ratings as of 6/30/2008.2. Performance as of 6/30/3008.
� 97% of AUM is in products that exceed the benchmark over 5 years, and 84% of AUM carry 3, 4 and 5-star ratings (5-year)
Large
Mid
Small
Value GrowthBlend
Genesis(5 star)
Regency(4 star)
Partners(4 star)
Soc. Resp. (4 star)
Guardian(4 star)
Century(3 star)
MCG(4 star)
SCG(4/5 star)
Confidential
Notes: 1) Bubble size denotes AUM. 2) The REIT Fund is also 4 stars.
InceptionDate 1 Year 3 Years 5 Years
Large Cap Disciplined Growth 1/1/1987 2.4% 9.9% 12.3%Russell 1000 Growth Index -6.0% 5.9% 7.3%
Small Cap Growth 11/1/1998 -3.4% 12.6% 15.0%Russell 2000 Growth Index -10.8% 6.1% 10.4%
Mid -Cap Growth 8/1/1997 -6.5% 12.3% 14.3%Russell MidCap Growth Index -6.4% 8.2% 12.3%
Int ernational Equity (closed) 7/1/1994 -13.0% 13.0% 20.9%MSCI EAFE -10.2% 13.3% 17.2%
International Large Cap Equity 1/1/2005 -7.7% 17.3%MSCI EAFE -10.2% 13.3%
Real Estate Securities 4/1/2002 -14.2% 5.8% 15.8%FTSE NAREIT Equity REITs Index -13.6% 5.0% 14.3%
Socially Responsive Investing 1/1/1991 -9.4% 8.5% 10.9%S&P 500 Index -13.1% 4.4% 7.6%
Annualized Return (gross of fees)
PIMAltEq
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Alternatives Alternatives
– ~420 individuals– $30Bn in AUM, plus ~$60Bn in minority stake partner AUM– 10 distinct investment programs
Private Equity Hedge Funds
Minority Stakes(2)
� $4.8Bn AUM Fund of Hedge Funds (LBAIM)– Multiple products and customized accounts– Flagship low-vol arbitrage fund with leading Sharpe ratios– Other Long/Short and geography specific FoHFs
� 3rd Party Hedge Advisor - $0.5Bn AUS
Fund of Hedge Funds
� $4.7Bn AUM; partnership w/ Gresham Investment Management to manufacture products– Diversified commodities exposure through long-only, fully
collateralized commodities futures
Commodities
Confidential
Developed Businesses
Field Street Capital
Management___________________________Note: AUM as of 6/30/08.1. Currently in the market.
PIMAltEq
Proprietary
Merchant Banking (Fund IV)
Venture Capital (Fund V)
Real Estate (Opp. III/Mezz II)
Third Party Managers
Fund of PE Funds (Crossroads 18)
Secondary (Fund II)(1)
Co-Investments (Fund II)(1)
LBPEP (Listed Vehicle)
___________________________2. Inclusion of certain minority stakes will depend upon final structure of a potential transaction.
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$5$9 $11
$17$21
$3
2004 2005 2006 2007 6/30/08
Alternatives: Private Equity Overview
Investment Offerings
Institutions51%
Other2%
High Net Worth18%
Crossroads Legacy
7%
Lehman Brothers
Employees6%
Lehman Brothers
16%
Private Equity Historical Commitments by LP(2)
___________________________1. As of June 30, 2008. 2. Based on historical commitment amount by investors.3. Excludes shared LEH allocations; see Appendix for detail. 2007 excludes $19.3M in non-recurring expenses associated with the launch of LBPEP (publicly traded fund of funds).
Traditionally focused on four asset classes, with AUM of $21Bn (1)
2004 – 2008E Assets Under Management ($Bn)
Confidential
Plus est. fundraising for remainder of FY08
Alternatives: Private Equity Financials ($M)
Developed Businesses
PIMAltEq
� Merchant Banking – Est. in 1984; investing Fund IV– $4.5Bn AUM– Targets middle market companies globally
� Venture Capital – Est. in 1995; investing Fund V– $0.8Bn AUM; 89 investments made– Invest in high growth venture-backed technology companies
� Real Estate– Est. in 2000; investing Opp III and raising Mezz II– $7.4Bn AUM– Equity and debt investing in property, real estate companies
and service businesses� Private Fund Investments– Est. in 2002; $8.1Bn AUM
2007 2008 2009 2010
RevenueManagement Fee $168 $244 $307 $403Carried Interest (Net) 90 19 80 160
Total 258 262 387 563
EBITDA (3) ($9) ($10) $96 $235Margin (%) (4%) (4%) 25% 42%
Total Carry (2010+) $2,497
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Alternatives: Private Equity Carried Interest
Due to the rapid growth in commitments in the current periods, the Private Equity business has a significant amount of embedded carried interest value. Note: analysis does not include any new funds after those currently planned (i.e., post 2010)
Developed Business
___________________________Note: Total represents carried interest revenue when recognized by IMD and is net of carry paid directly to the Principals as members of the GP.
PIMAltEq
Confidential
Asset Class
Developed '03 '04 '05 '06 '07 '08 '09 '10 Invested TotalGross IRR '10 '11 '12 '13 '14 '15 '16 '17 '18
Merchant Banking 1.0 0.3 3.5 1.2 4.7 22.5% 40 63 68 68 68 0 0 0 0
Venture Capital 0.3 0.4 0.4 0.3 1.1 22.5% 10 14 8 12 13 7 9 7 5
Real Estate 1.6 0.7 2.8 0.8 4.0 0.5 7.0 6.1 17.4 ~18% 75 89 168 134 198 194 92 92 0
Private Fund Inv Group 0.6 0.8 3.2 1.5 3.6 2.9 2.0 3.5 14.6 ~19% 35 51 52 73 74 73 55 10 4
Subtotal (Developed) 1.9 2.3 3.9 3.2 6.2 7.6 3.4 9.4 11.0 37.8 160 216 297 287 352 274 155 108 9
Start-up
Infrastructure / MLP 0.7 1.5 0.7 2.2 14.9% 0 3 3 37 38 38 39 5 6
Global / Euro Mezzanine 1.2 1.1 2.0 1.6 4.3 19.3% 15 24 23 65 42 42 0 0 0
Strategic Partners Group 3.0 0.0 3.0 20.0% 8 12 16 16 16 192 0 0 0
Subtotal (Start-up) 0.0 1.2 0.0 0.0 0.7 1.1 4.5 2.0 2.3 9.5 23 39 42 118 96 272 39 5 6
Total $1.9 $3.4 $3.9 $3.2 $6.9 $8.7 $7.9 $11.4 $13.4 $47.3 $182 $255 $339 $405 $448 $546 $194 $113 $15
Fundraising by Closing ($Bn) Commitments ($Bn) Carried Interest (Net) ($M)
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Alternatives Private Equity: Performance
___________________________1. Investment capital does not reflect undrawn commitments.2. All returns are as of 3/31/2008, except for the Fund of Fund Investments return which is as of 12/31/2007. Gross internal rates of return (IRR) do not reflect the management fees, carried interest, taxes,
transaction costs and other expenses to be borne by investors in each fund, which in the aggregate are expected to be substantial.
Private Equity funds have had strong performance in a bsolute terms and relative to peers
Confidential
Developed Businesses
PIMAltEq
Lehman Brothers Selected Private Equity Investment StrategiesYear of Historical Gross
Investment Strategy Invested Capital(1) Inception IRR (2) Next Fund
Merchant Banking
Mid-Cap Buyouts $3.7Bn 1989 37% 2011
Venture Capital $813M 1996 22% 2010
Real Estate
Opportunity $4.4Bn 2000 35% Currently in MarketMezzanine $1.7Bn 2004 20% Currently in Market
Private Fund Investments
Co-Investment $1.1Bn 2006 30% Currently in MarketFund of Funds $5.3Bn 1987 23% Currently in MarketPublic Vehicle $0.5Bn 2007 n/a PublicSecondary Investments $0.5Bn 2005 45% Currently in Market
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Alternatives: Hedge Funds & Commodities
The hedge fund business includes high growth fund of funds and commodities products as well as six strategic partnerships with leading hedge fund managers
Fund of Hedge Funds and Commodities(1)
Alternatives Financials ($M)AUM Growth ($Bn)
1.22.5 3.2 3.8 4.5 4.8
1.6
3.64.7
0.4
2003 2004 2005 2006 2007 6/30/08
Commodities
FoHFs
$1.2
$2.5$3.6
$5.4
$8.0
$9.4
57% CAGR
Minority Interest Partnerships
$8.2Bn(3)January 200725%Spinnaker
$2.3Bn(3)May 200845%(4)R3$0.8Bn(5)April 200845%One William Street
$9.1Bn(1)April 200520%Ospraie
April 2008
March 2007
Date AUM(2)Equity %Partner
20%
20%
$0.1Bn(3)Field Street
$40.2Bn(3)D.E. Shaw
___________________________1. AUM as of 6/30/2008.2. Minority stakes AUM not included in IMD AUM.
Confidential
Developed Businesses
� LBAIM Fund of Hedge Funds - $4.8Bn
– 20 investment professionals with deep industry knowledge
– Flagship Diversified Arbitrage fund plus numerous start-up strategies (Asia Multi, Europe L/S, SelectAccess)
– 54% of AUM from outside of the U.S.
� Commodities Business - $4.7Bn
– 20-year track record through Gresham partnership
– Proprietary index outperforms GSCI and DJ-AIGCI
___________________________3. AUM as of 7/1/2008. 4. Tiered structure.5. As of 6/30/2008, includes $200M of committed Private Equity.6. Performance fees denoted in calendar year; see Notes. 7. Excludes shared LEH allocations; see Appendix for detail.
PIMAltEq
Inclusion of certain minority stakes will depend upon final structure
� IMD also holds an approximate 11% sales-restricted stake in GLG public stock
2007 2008 2009 2010
RevenueManagement Fees $62 $72 $81 $89
Performance Fees(6) 8 5 24 29Profit Alloc. from Partners 157 407 394 468
Total 226 484 499 586
EBITDA (7) $171 $434 $445 $527
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Private Investment Management
� Comprehensive suite of WM products (NB, PE, HFs, etc.) and services (Wealth and Portfolio Advisory, Trust)
� Respected wealth management player
– $82Bn total AUS(1)
� Includes $1Bn AUM + $6Bn AUS(2) in Manager Access Program (MAP) that allocates to 3rd party long-only managers
� $10M+ with focus on first-generation wealth
� 30,000 total HHs; 2,500 $10M+ HHs(1)
� Primary wealth advisor or provider of leading asset management products
– 38% fee-based AUS(1)
� Exclusive, highly skilled and extremely productive IRs
� 366 IRs with $2.0M IR productivity
Role
Target Clients
Platform
Sales Force
Business
Over a five year period, PIM has transformed from a tr ansactional brokerage model to a wealth management platform leveraging the strength of the Asset Management and Private Equity franchises
Confidential
PIM Financials ($M)
Developed Businesses
HNW % Fee-Based Assets under Supervision
13%
21%
30%
34%
38%
25%
2003 2004 2005 2006 2007 5/31/08
PIMAltEq
___________________________1. As of 5/31/2008.2. As of 6/30/2008.
___________________________3. Excludes shared LEH allocations; see Appendix for detail.
2007 2008 2009 2010
Revenue $630 $614 $645 $709
EBITDA (3) $83 $80 $91 $115Margin (%) 13% 13% 14% 16%
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Developing Businesses
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11 10 1832
51 41
46
7
6
6
35 3736
38
4240
4 55
5
12
11
41
2
5
8 27
2003 2004 2005 2006 2007 6/30/08Liquidity Core/Index Leverage Markets Munis Structured Products
Fixed Income Asset Management
Institutionally oriented fixed income business, initi ated by the acquisition of Lincoln Capital in 2003. Investments made since 2003 in Fixed Income, Liquidity, HY/Loan and Structured Product businesses are yielding returns
� Integrated Fixed Income Platform:
– Liquidity: Acquired $5Bn money market business in 2003 and have grown it to $41Bn
– Core/Index:$40Bn AUM - Capabilities acquired as part of Lincoln Capital acquisition in 2003
– Leveraged Markets:$11Bn AUM - Leading High Yield business (Lincoln Capital acquisition) and growing Loan/CLO platform (LightPoint acquisition: 2007)
– Structured Products:$27Bn AUM, including CDO funds, ABS CDOs and dedicated ABS mandates
– Municipals:$6Bn AUM
Lehman Brothers Asset Management
Investment Performance Summary Fixed Income Financials ($M)(1)
AUM Growth ($Bn)
Confidential
Developing Businesses
___________________________Note: AUM as of 6/30/2008.1. Includes Structured Credit/CDO and Loan Opportunities business.
Eur/AsiaFI
$53 $55$67
$87
$119$126
21% CAGR
___________________________2. Excludes shared LEH allocations; see Appendix for detail.
2007 2008 2009 2010
RevenueManagement Fees $132 $176 $206 $253Performance Fees/Other 3 0 2 2
Total 135 176 208 256
EBITDA (2) $6 $38 $62 $98Margin (%) 4% 22% 30% 38%
1 Year 3 Years 5 YearsFull Market High Yield -0.86% 5.16% 7.20%ML U.S. HY Master II Contstr. Index -1.64% 4.57% 6.83%
Core Bond 3.58% 3.32% 3.70%Lehman U.S. Aggregate Index 7.12% 4.09% 3.85%
Core Plus Bond 3.80% 3.69% 4.24%Lehman U.S. Aggregate Index 7.12% 4.09% 3.85%
LB M unicipal Bond 5.32% 3.39% 3.01%70% ML 3-7, 30% ML 7-12 Muni Index 5.66% 3.27% 2.99%
Annualized Return (gross of fees)
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Fixed Income: Business OpportunitiesDeveloping Businesses
Confidential
Eur/AsiaFI
Investments to date and unprecedented market conditio ns across Fixed Income have created new opportunities to grow the franchise by migrating to higher fee strategies
Business-wide
Liquidity
Core/Index
Leveraged Markets
Structured Products
Municipals
� Integrate HY Bond/Loan research
� Developing distressed business plan
� Shift focus to secondary loans; ~$3Bn new capacity� Roadshows conducted in Europe and Asia-Pacific
� Credit cycle shift
� CLO market slowdown� Broaden client base
� Shifted focus of business to credit risk in ABS
� Launched ABS Distressed Fund
� Marketing CDO Distressed Fund
� Won $22Bn global ABS mandate in Europe
� Market dislocation
� Acquisition of Robeco Muni business
� Improved track record to attract additional AUM
� Business scale
� Investments made in “plus” capabilities� Conducted ~80 client reviews in Q2: minimal client outflows
� De-emphasizing mortgage roll strategy
� Complex client mandates� Performance
� Business investments made for meaningful AUM and profitability growth
� New risk guidelines implemented
� AUM scale
� Risk management
� Selected H2 2008 launches: FX, Eurobond, EM
� Marketing of credit dislocation and other opportunity funds� Non-U.S. roadshows for international client demand� Intermediary channel and mutual funds
� Improve product mix
� Market dislocation� Broaden client base
Action StepsKey Opportunities
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Europe and Asia-Pacific Asset Management
We have built the administrative and new product deve lopment infrastructure to expand the asset management businesses in Europe and Asia-Pacific
Developing Businesses
� Foundation for Significant Growth– Robust product development capabilities– Scaled client service platform to support many products– Team in place to compete for / win strategic partnerships
� Global Fixed Income– 8 individuals, established 2007– $1.8Bn AUM– Hired and expanded team in rapidly growing asset class– Early traction with SWF/institutional investors– Near term product launches for European Bond and Currencies
� European Quant– 13 individuals, established 2006– $0.8Bn AUM– Building track records across a number of "beta +" equity strategies– Key wins with European clients attracted to the “antibenchmark"
approach� Structured Asset Management– 6 individuals
– $1.1Bn AUM from business start-up 2 years ago – Focus on structuring Capital Markets strategies and IMD funds into
investment fund structures (UCITS III compliant) for broad distribution to European clients
– Integrated approach with LEH Capital Markets product groups� Alpha Funds – 18 funds launched or seeded
– $0.6Bn AUM– Existing funds packaged in jurisdictionally-friendly format– Leverages the strong existing U.S. track records
Key European Initiatives� Foundation for Significant Growth
– Secured liftout of China team (from Avenue Capital)– Operations team located in Singapore– Client service capabilities throughout region
� China Long/Short (Greater China equities focus)– $0.1Bn AUM– Deep expertise in local markets, based in Shanghai & HK– 9 investment professions led by experienced CIO & lead PM– Expanding business into long-only strategies
� Alpha Funds – 13 new funds launched (similar to Europe)
Key Asian Initiatives
Confidential
Eur/AsiaFI
IMD Europe/Asia-Pacific Mgmt. Infrastructure ($M)
___________________________1. Excludes shared LEH allocations; see Appendix for detail. Some revenues / expenses from Europe and Asia-Pacific are allocated to other segments to take into account globally manufactured products and
alignment of distribution support with respective product groups.
2007 2008 2009 2010
RevenueManagement Fees $11 $19 $33 $61Performance Fees 0 0 3 3
Total 11 19 35 64
EBITDA (1) ($67) ($66) ($46) ($34)
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Start-up Efforts
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Start-up Efforts
IMD has funded a number of initiatives with high grow th potential. These initiatives have the potential to generate significant economics in the very near term
� 15 person Infrastructure team established in 2008 (U.S., Europe, Asia-Pacific)
– Targeting $1.5Bn in commitments
� 7 person MLP team established in 2006
– Closed $0.7Bn MLP fund in 2007
� Focus on “core, value added”transportation, energy, communications and social infrastructure
New Private Equity Initiatives Quantitative Investment Group Initiatives
New Initiatives Financials ($M)� Targeting a $1.4Bn raise
� Integrating with existing Europe Mezzeffort (strong returns since 2002)
� Continuation of LEH strategy of purchasing minority interests in leading hedge fund managers
– Strong track record with 5 deals
– Targeting $3Bn+ in commitments
– Marketing underway; investor feedback very positive
Infrastructure/MLP
Global Mezz
HF Minority Stakes
US Quant
� $1Bn AUM across numerous start-up strategies led by industry leading professional
� Based on quantitative tactical asset allocation
� Includes long-only and hedge fund products
� 12 quantitative modellers / investment professionals
� 3-year record across several leading products
Confidential
Start-up Efforts
___________________________1. Excludes shared LEH allocations; see Appendix for detail.
2007 2008 2009 2010
RevenueManagement Fees $21 $35 $100 $140Carry/Performance Fees 14 4 52 63
Total 35 39 152 203
EBITDA (1) ($12) ($39) $55 $94Margin (%) (34%) (102%) 36% 46%
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Relationship with Lehman Brothers
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Connectivity with Lehman Brothers
IMD has built a number of bridges with Lehman Brother s, which have yielded material rewards
Relationship with Lehman Brothers
Specific
� 19% of capital
– 10% from employees & 9% from Lehman Brothers(1)
� Deal sourcing opportunities, especially benefiting
Merchant Banking, Co-invest Fund, and U.S. Real Estate
� Prime Services and Investment Banking relationship
important to liquidity business ($5+Bn)
� Non-US institutional distribution collaborates closely
with Capital Markets colleagues
� Seed capital
� HNW access to syndicate, research and capital markets
execution ($300M in revenues)
� HNW referrals from Lehman Brothers, especially
Investment Banking ($3.5Bn in AUS since 2006)
PIM
Priv
ate
Equ
ityA
sset
Man
agem
ent
� Brand
� Talent transfer (IMD as net importer of Firm talent)
� Intellectual capital
� Firmwide relationships / goodwill
� Acquisition capital
General
� Ongoing Lehman Brothers’ ownership stake
� Service level agreements
� Incentives to drive future cooperation
– Unit vs. individual
Opportunities to Retain Benefits
___________________________1. Across both developed and start-up Private Equity funds. 16% from Lehman Brothers and 6% from Lehman Brothers employees for developed Private Equity funds.
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Conclusion
� Committed management team
� Set of valuable businesses with a number of segment leading efforts– Unique and proven ability to “bring businesses together” to win the most complex mandates
� A powerful franchise with unique value proposition– Core of ‘developed’ businesses with strong profits and continued growth trajectories– ‘Developing’ efforts nearing the scale to drive additional profit growth– A number of attractive ‘start-up’ initiatives that are poised for rapid growth
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Appendix
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I
Financial Summary – Developed BusinessesAppendix
___________________________1. “ Management Fees” for PIM business include transactional based revenues.2. EBITDA adds back ~$5M of fixed assets depreciation across IMD throughout all time periods (NB Equities: $2.5M, Established Alts: $0.8M, PIM: $1.4M, Fixed Income: $0.5M, Europe/Asia-Pacific:
$0.2M, Start-up Alts: $0.1M).
Confidential
($ in millions) Neuberger Berman Equity Established Alternatives Private Investment Management
2007 2008 2009 2010 2007 2008 2009 2010 2007 2008 2009 2010Revenue
Management Fees(1) $992 $1,055 $1,180 $1,333 $229 $316 $388 $492 $630 $614 $645 $709
Performance Fees 0 0 3 4 98 24 104 189 0 0 0 0
Client Revenue $993 $1,055 $1,183 $1,336 $327 $340 $492 $681 $630 $614 $645 $709
Minority Stakes 0 0 0 0 156 407 394 468 0 0 0 0
Total Revenue $993 $1,055 $1,183 $1,336 $483 $746 $887 $1,149 $630 $614 $645 $709
Expenses
Comp & Benefits $430 $465 $520 $581 $237 $240 $259 $296 $319 $305 $314 $338
NPE 120 129 141 154 39 39 40 42 67 73 76 80
Dedicated Allocations 51 56 59 62 46 45 47 49 163 157 165 178
Total Expenses $601 $651 $720 $796 $322 $323 $346 $388 $548 $535 $555 $596
EBITDA (Excl LEH Alloc) (2) $394 $407 $465 $542 $162 $424 $541 $762 $83 $80 $91 $115
% margin 40% 39% 39% 41% 34% 57% 61% 66% 13% 13% 14% 16%
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Financial Summary – Developing and Start-up BusinessesAppendix
Confidential
Developing Businesses Start-up Businesses
($ in millions) Fixed Income Europe and Asia-Pacific Alternatives
2007 2008 2009 2010 2007 2008 2009 2010 2007 2008 2009 2010Revenue
Management Fees $132 $176 $206 $253 $11 $19 $33 $61 $21 $35 $100 $140
Performance Fees 3 0 2 2 0 0 3 3 14 4 52 63
Total Revenue $135 $176 $208 $256 $11 $19 $35 $64 $35 $39 $152 $203
Expenses
Comp & Benefits $81 $84 $89 $95 $41 $39 $49 $64 $33 $59 $77 $88
NPE 26 29 32 36 10 13 14 14 5 9 10 10
Dedicated Allocations 23 25 26 27 27 34 19 20 8 10 10 11
Total Expenses $130 $138 $147 $158 $79 $86 $82 $98 $47 $78 $97 $109
EBITDA (Excl LEH Alloc) (1) $6 $38 $62 $98 ($67) ($66) ($46) ($34) ($12) ($39) $55 $94
% margin 4% 22% 30% 38% NA NA NA NA (34%) (102%) 36% 46%
___________________________1. EBITDA adds back ~$5M of fixed assets depreciation across IMD throughout all time periods (NB Equities: $2.5M, Established Alts: $0.8M, PIM: $1.4M, Fixed Income: $0.5M, Europe/Asia-Pacific:
$0.2M, Start-up Alts: $0.1M).
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Financial Summary – IMDAppendix
Confidential
Total Developing
($ in millions) and Start-up Businesses
2007 2008 2009 2010 2007 2008 2009 2010 2007 2008 2009 2010Revenue
Management Fees $1,851 $1,985 $2,213 $2,534 $164 $230 $338 $454 $2,016 $2,214 $2,551 $2,988
Performance Fees 98 24 107 193 17 4 57 69 115 28 164 261
Minority Stakes 156 407 394 468 0 0 0 0 156 407 394 468
Total Revenue $2,105 $2,416 $2,715 $3,195 $181 $234 $395 $522 $2,287 $2,649 $3,110 $3,717
Expenses
Comp & Benefits $985 $1,010 $1,093 $1,215 $155 $182 $214 $247 $1,140 $1,192 $1,308 $1,463
NPE 226 241 257 276 42 51 55 60 268 292 313 336
Dedicated Allocations 260 258 271 289 58 68 56 58 318 326 326 346
Total Expenses $1,471 $1,509 $1,621 $1,780 $255 $301 $325 $365 $1,726 $1,810 $1,946 $2,145
EBITDA (Excl LEH Alloc) (1) $639 $911 $1,098 $1,419 ($73) ($67) $71 $158 $566 $844 $1,169 $1,577
% margin 30% 38% 40% 44% (40%) (29%) 18% 30% 25% 32% 38% 42%
Shared LEH Allocations (135) (144) (151) (159)
EBITDA (incl. Shared LEH Allocations) (1) $431 $700 $1,018 $1,418
Total Developed Businesses Total
___________________________1. EBITDA adds back ~$5M of fixed assets depreciation across IMD throughout all time periods (NB Equities: $2.5M, Established Alts: $0.8M, PIM: $1.4M, Fixed Income: $0.5M, Europe/Asia-Pacific:
$0.2M, Start-up Alts: $0.1M).
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Shared LEH Allocations� Beyond direct expenses, IMD receives additional services provided by Lehman Brothers Corporate
� Shared allocations are an estimate of the cost Lehman Brothers incurs for services that are provided by shared central corporate functions (i.e. technology allocation reflects network infrastructure and IT security services) that would be required on a prospective basis
– Technology resources specifically dedicated to IMD are included in the direct expenses of the business
� Lehman Brothers anticipates it will continue to provide a significant number of these functions as part of an on-going services agreement
� IMD expects that certain efficiencies will be achievable in the future
Estimated Shared Allocations by Business ($M) Shared Allocation by Function (%)
100% = $144M (2008 Est.)
Technology50%
Legal & Compliance
11%
Real Estate11%
Operations7%
Finance7%
Corporate Services
4%
HR & Other10%
Appendix
Confidential
2008 Est.Developed Businesses
Equities $40Private Equity - Established 18 Alternatives (ex. PE) 3 HNW Brokerage 63
Total Developed Businesses 124
Developing Businesses
Fixed Income 10 Europe/Asia 6 Total Developing 16
Start-up Businesses 3
Total $144
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IMD Balance Sheet and Principal Revenue
Net Tangible Assets Principal Revenue(2)
IMD holds seed investments, 3 rd party LP investments in hedge funds, GLG stock, and investments in our proprietary funds
Confidential
Appendix
2H 2008 2009
Net Revenues
Equities $12.2 $21.7
Fixed Income 4.0 21.0Quant 14.8 23.6Total Asset Management Seed $31.0 $66.3
Private Minority Stakes & Other Strategies (1) $101.3 $236.6Private Equity 87.4 219.2Total Principal Revenue $188.7 $455.8
Total Net Revenues $219.7 $522.2
___________________________1. Excludes intangible assets and corresponding GP profit allocation for Hedge Fund Minority Stake investments.2. Principal P&L is excluded from all other financials in the presentation.
($ in millions) Revised May Projected Investment Category 5/31/2008 1/1/2009 1/1/2010
Asset Management Seed
Equities $244 $217 $238
Fixed Income 99 238 259Quant 318 250 274
Asset Management Seed $662 $705 $771
Private EquityMerchant Banking $204 $287 $378Venture Capital 175 195 161Real Estate 705 858 967Private Funds Investment Group 429 617 817Credit Related 252 339 355Infrastructure 160 172 213SPG - - 150LBAIM 115 124 129Other 146 147 128
Total Private Equity $2,185 $2,740 $3,298
Total Internal Investments $2,847 $3,445 $4,069
Private Minority Stakes(1)
R3 LP $1,089 $1,241 $1,465One William Street LP 265 878 1,542Other HF Investments 87 95 110
Total Private Minority Interests $1,441 $2,214 $3,118
Other Strategic (GLG Stock/Shares)GLG Stock $214 $171 $145GLG LP Investment 71 75 82
Total Other Strategic $285 $246 $227
Total External Investments $1,725 $2,459 $3,346
Margin Debits 337 337 337
Total Tangibles Assets $4,909 $6,241 $7,751
Excluded Working Capital Items: Cash and Receivables $325 $325 $325Employee Loans 60 60 60Other Assets 57 57 57Total Excluded Items $441 $441 $441
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IMD Flows Appendix
Confidential
Quarterly AUM Flow Data ($Bn) Annual AUM Flow Data ($Bn)2006 2007 2008
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Jun-08 2006 2007 YTD 2008Equities
BoP AUM $75 $83 $86 $87 $95 $96 $108 $104 $107 $101 $109 $75 $95 $107Net Flows 4 2 0 1 (0) 2 1 1 0 (0) 1 6 3 0Mkt Appr. 3 1 1 6 2 10 (4) 3 (6) 8 (7) 12 10 (4)EoP AUM 83 86 87 95 96 108 104 107 101 109 103 95 107 103
Fixed IncomeBoP AUM 56 57 57 59 62 63 66 73 77 79 77 56 62 77Net Flows 1 1 0 2 1 2 7 2 1 (1) 20 5 12 20Mkt Appr. 0 (0) 1 1 1 1 (0) 2 0 0 (1) 2 3 (0)EoP AUM 57 57 59 62 63 66 73 77 79 77 97 62 77 97
AlternativesBoP AUM 14 15 16 17 18 19 23 26 29 30 35 14 18 29Net Flows 0 1 1 1 0 4 3 2 1 5 0 4 9 6Mkt Appr. 0 (0) (0) (0) 0 0 0 1 (0) 0 0 0 2 0EoP AUM 15 16 17 18 19 23 26 29 30 35 35 18 29 35
Total Long TermBoP AUM 145 155 159 163 175 178 197 203 213 210 221 145 175 213Net Flows 6 4 1 4 1 8 11 5 2 3 21 15 24 26Mkt Appr. 4 1 2 8 3 11 (4) 5 (6) 9 (8) 14 14 (5)EoP AUM 155 159 163 175 178 197 203 213 210 221 235 175 213 235
LiquidityBoP AUM 18 21 26 29 33 40 45 52 54 59 50 18 33 54Net Flows 3 6 3 4 7 4 7 2 4 (10) (4) 16 20 (11)Mkt Appr. (0) (0) 1 0 - 0 1 0 0 1 0 1 1 1EoP AUM 21 26 29 33 40 45 52 54 59 50 45 33 54 45
TotalBoP AUM $163 $175 $185 $192 $209 $218 $241 $255 $268 $268 $270 $163 $209 $268Net Flows 9 9 4 8 8 12 18 7 6 (7) 16 31 44 15Mkt Appr. 4 0 3 8 3 11 (3) 5 (6) 9 (8) 15 15 (4)EoP AUM 175 185 192 209 218 241 255 268 268 270 279 209 268 279
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Experienced Management Team
Confidential
Appendix
___________________________1. Shared Lehman Brothers resource.
Name RoleNo. of Years at LEH/ Industry Experience
George Walker Head of IMD 2/16
Joseph Amato Head of Asset Management 14/24
John Bluher Head of IMD Legal 1/21
Mark Bourgeois Co-Head of Institutional Sales 1/26
John Cecil(1) Senior Advisor 10/28
Edward Grieb Chief Financial Officer 17/24
Perry Hoffmeister Head of IMD Europe & Middle East 20/20
Eric Johnson Co-Head of Institutional Sales 3/28
Andrew Komaroff Chief Administrative Officer 8/15
Chris Manning Head of IMD Asia-Pacific 11/14
Mike Odrich Head of Private Equity 22/22
Jack Petersen Head of Private Investment Management 5/15
Vittorio Pignatti Head of Europe & Middle East Private Equity 19/28
Ken Umezaki Deputy Head of Asset Management 19/23
Heather Zuckerman Deputy Chief Administrative Officer & Head of HR 7/12
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Notes
1. Financial data and forecasts are management reports and will differ from GAAP reported financials. Differences may occur due to the exclusion of certain businesses, the recognition and timing of certain revenue and expense items, the exclusion of certain non-recurring or one-time items and the exclusion of certain Firm overhead expense allocations. Compensation-related expenses excluded:
– Employee severance of $15.9M in 2007 and $14.5M in 2008 (June YTD)
– Retention payments associated with 2003 Neuberger Berman transaction of $37.2M in 2007 and $26.7M estimated for 2008. 2008 is the final year for such payments
2. Includes all IMD related businesses except for the middle market institutional sales force (ICG), including Corporate Treasury Services, and the LibertyView and Satori hedge fund platforms
3. Years reflect Lehman Brothers fiscal year (which ends November 30th); however, performance fees associated with annual incentive fee products have been shifted to match the calendar year in which such fees were generated. Minority Interest profit allocations default to methodology of each strategic partner
4. Actual headcount data as of 6/30/2008
5. Private Equity carried interest projections notes:
– Where noted Private Equity AUM has been calculated according to the following: (1) 100% of Committed Capital beginning when management fees are earned and through the end of a Fund's commitment / investing period, then (2) Carrying value of remaining assets of Funds which are beyond their commitment / investing period. Specific funds, e.g. MLP Opportunity Fund and LBPEP, have AUM equal to NAV. AUM may differ from annual "fund raising" statistics included in this document
– Carried interest projections are based on current modeled performance for existing investments and assumed fund-by-fund MOIC on uninvested capital
6. Shared LEH allocations are an estimate of the current cost that Lehman Brothers incurs for services that are currently provided by shared central corporate functions that would be required on a prospective basis. It is anticipated that Lehman Brothers will continue to provide a significant number of these functions as part of an on-going services agreement, however certain efficiencies may be achievable in the future
Appendix
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